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| BIS economist Shin Hyun-song, right, and BOK Gov. Rhee Chang-yong speak during a seminar in Seoul, Feb. 1. Yonhap |
A weak dollar could serve as a boon for Korea's trade going forward as it provides better financing conditions for businesses, an economist at the Bank for Intentional Settlements (BIS) said Wednesday.
Shin Hyun-song, an economic adviser at the Switzerland-based BIS, also forecast that the dollar will likely stabilize "to some extent" after reaching a peak in October last year.
"Should the dollar continue to stay weak, it could provide a chance for exports to rebound faster than expected in comparison with last year when trade greatly deteriorated," Shin told a seminar jointly arranged by the Bank of Korea (BOK) and the Korea Chamber of Commerce and Industry in Seoul.
"You might see it as ironic, but a weak dollar under the dollar-based value chains could provide more room for financing conditions that would result in bolstering trade at a much faster speed," he added.
Usually, a strong dollar or a weak local currency is known to bolster exports by improving their price competitiveness in overseas markets.
The dollar, however, had jumped last year against not just the won but also other major currencies, including the Japanese yen, erasing much of Korean exporters' possible advantage.
A rise in the dollar's value could also increase financial costs linked to overseas debt and hurt businesses' financial soundness.
Korea's exports rose 6.1 percent on-year in 2022 to reach an all-time high, but the country suffered its largest-ever trade deficit on high global energy prices.
The outlook for exports remains bleak amid growing worries over a global recession caused by monetary tightening in major economies.
Asked about the dollar's movement, Shin said the possibility is not that high that the greenback will jump more sharply after reaching a peak in the autumn of last year, adding, "Though I am half-hoping and half-predicting, the dollar will likely stabilize to some extent." (Yonhap)
